Morning Brief: G7 summit begins as trade tensions escalate

What to watch today

REUTERS/Jonathan Ernst

Summer doesn’t officially begin in the Northern Hemisphere for another two weeks but Friday will certainly feel like the unofficial beginning of a summer lull in markets. On the calendar on Friday, the economic calendar will feature only the final reading on wholesale inventories for April while the most notable companies reporting earnings will be WageWorks (WAGE) and Liberty Tax (TAX).

With little in the way of catalysts out of the corporate or economic worlds on Friday, expect markets to be attuned to any news on trade coming out of the G7 meeting in Canada on Friday. This meeting comes as the Trump administration last week imposed tariffs on imports from Canada, Mexico, and the EU.

Top news

Justice Department takes aim at heart of health law: The Trump administration said in a court filing late Thursday that it will no longer defend key parts of the Affordable Care Act, including the requirement that people have health insurance and provisions that guarantee access to health insurance regardless of any medical conditions. The decision, announced in a filing in a federal court in Texas, is a rare departure from the Justice Department’s practice of defending federal laws in court. [AP]

McDonald’s plans corporate job cuts: McDonald’s Corp. (MCD), battered by price wars and struggling to revive its U.S. burger business, said it will cut layers of managers as part of a half-billion-dollar plan to shrink administrative expenses by the end of next year. The latest reorganization comes as the fast-food chain has been working to turn around its crucial U.S. division for more than three years. [The Wall Street Journal]

China’s trade surplus with US grew: China’s political sensitive trade surplus with the United States widened in May from a year earlier, while its total global surplus shrank as imports accelerated. Imports rose 26% from a year ago to $187.9 billion, up from April’s 21.5% growth, customs data showed Friday. Exports rose 12.6% to $212.9 billion, little changed from the previous month’s 12.9%. [AP]

Ant Financial raises $14 billion: Ant Financial Services Group, operator of China’s biggest online payment platform, said it raised around $14 billion in what market watchers called the biggest-ever single fundraising globally by a private company. The cash will boost Ant’s firepower ahead of a widely expected initial public offering in Hong Kong and mainland China as early as next year.[Reuters]

Smucker forced to raise some retail prices: Shares in J.M. Smucker Co. (SJM) fell sharply Thursday after the maker of Folgers coffee and Jif peanut butter said higher costs hurt profitability and the company needed to raise retail prices on some foods. Smucker has been trying to reshape its business as well-established brands—like Crisco oil and Pillsbury cake mixes—struggle with sales declines. [The Wall Street Journal]